Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

Tower International Reports First Quarter 2019 in-line with Outlook, Closes on Sale of Europe and Affirms 2020 Outlook

 

LIVONIA, Mich., May 2, 2019 – Tower International, Inc. [NYSE: TOWR], a leading manufacturer of engineered automotive structural metal components and assemblies, today announced First Quarter 2019 results and updated its business outlook.

 

During the First Quarter 2019, Tower completed the sale of its European operations. In December 2018, Tower entered into an agreement to sell all of its European operations to Financière SNOP Dunois S.A. (“FSD”), a privately owned French auto supplier. The sale price represents an Enterprise Value of € 255 million, or an EV / Adjusted EBITDA multiple of 5.4x 2018 full year earnings. The transaction closed March 1, 2019. Tower received $250 million in net proceeds after fees and settlement of fixed rate Term Loan swaps. Upon completion of the divestiture, a payment of $50 million was made on the Term Loan, reducing the balance to $253 million.

 

·Revenue for the First Quarter was $379 million compared with $407 million in 2018, and previous Outlook of $375 million. The year over year revenue decrease reflects primarily lower sales resulting from launch cadence and program changeover, offset partially by higher revenue from new platforms.

 

·Income from continuing operations for the First Quarter 2019 was $7.7 million compared with $16.5 million in 2018. Including discontinued operations, GAAP net income was negative $5.1 million for the first quarter or $(0.24) per share, compared with net income of $17.3 million or $0.83 per diluted share last year. As detailed below, this year’s results included certain items which adversely impacted net income by $9.8 million. Excluding these items and comparable items in 2018, earnings per diluted share for the First Quarter 2019 was $0.23 compared with $0.82 a year ago and previous Outlook of $0.18 per share.

 

·Adjusted EBITDA for the First Quarter 2019 was $30.4 million compared with $43.0 million a year ago and previous Outlook of $30 million.

 

“Tower delivered First Quarter 2019 results in-line with our Outlook. The sale of Tower Europe further strengthens our balance sheet and positions Tower to capitalize on the healthy and growing light truck and SUV market in North America. We continue to balance our capital allocation, by investing in profitable growth, reducing debt and returning capital to shareholders,” said CEO Jim Gouin. “Near-term results will continue to be impacted by significant launch activity. However, with the completion of these launches, projected second half 2019 performance will result in higher run rate revenue, EBITDA and Free Cash Flow leading the way to a step function improvement in financial results for Full Year 2020.”

 

 

 

 

·Full Year 2019 Outlook includes:
oRevenue of $1.575 billion to $1.6 billion;
oAdjusted EBITDA of $165 million to $170 million;
oAdjusted EPS of $2.10 to $2.30 per diluted share which is adversely impacted by the adoption of ASC 842 and a higher tax rate; and
oPositive Full Year Free Cash Flow, with strong Free Cash Flow in the second half of the year more than offsetting the expected cash outflow in the first half of the year.

 

·With the completion of significant launch activity in 2019, financial results are expected to improve substantially. Full Year 2020 Outlook includes:
oRevenue of $1.69 billion to $1.74 billion;
oAdjusted EBITDA of $200 million to $210 million;
oAdjusted EBITDA margin of approximately 12 percent; and
oFree Cash Flow of more than $60 million.

 

Tower to Host Conference Call Today at 1:00 p.m. EDT

 

Tower will discuss its First Quarter 2019 results and other related matters in a conference call at 1:00 p.m. EDT today. Participants may listen to the audio portion of the conference call either through a live audio webcast on the Company’s website or by telephone. The slide presentation and webcast can be accessed via the investor relations portion of Tower’s website www.towerinternational.com. To dial into the conference call, domestic callers should dial (866) 393-4576, international callers should dial (706) 679-1462. An audio recording of the call will be available approximately two hours after the completion of the call. To access this recording, please dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and reference Conference I.D. # 1508207. A webcast replay will also be available and may be accessed via Tower’s website.

 

Non-GAAP Financial Measures

 

This press release includes the following non-GAAP financial measures: “adjusted EBITDA”, “adjusted EBITDA margin”, “adjusted earnings per share”, and “free cash flow”. We define adjusted EBITDA as net income/(loss) before interest, taxes, depreciation, amortization, restructuring items and other adjustments described in the reconciliations provided in this press release. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenues. Adjusted earnings per share exclude certain income and expense items described in the reconciliation provided in this press release. Free cash flow is defined as cash provided by continuing operating activities less cash disbursed for purchases of property, plant and equipment. We use adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share, and free cash flow as supplements to information provided in accordance with generally accepted accounting principles (“GAAP”) in evaluating our business and they are included in this press release because they are principal factors upon which our management assesses performance and in certain instances in measuring performance for compensation purposes. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP are set forth below. The non-GAAP measures presented above are not measures of performance under GAAP. These measures should not be considered as alternatives for the most directly comparable financial measures calculated in accordance with GAAP. Other companies in our industry may define these non-GAAP measures differently than we do and, as a result, these non-GAAP measures may not be comparable to similarly titled measures used by other companies in our industry; and certain of our non-GAAP financial measures exclude financial information that some may consider important in evaluating our performance. Given the inherent uncertainty regarding fair value adjustments to our pension plan, potential restructuring expenses, adjustments related to our long-term incentive compensation programs in any future period, and earnings that occur within the separate tax jurisdictions in which we have operations, a quantitative reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is not feasible.

 

 

 

 

Forward-Looking Statements and Risk Factors

 

This press release contains statements which constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding prospective program launches, business growth, and the Company’s projected earnings, free cash flow, revenues, Adjusted EBITDA and Adjusted EBITDA margin. The forward-looking statements can be identified by words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “project,” “target,” and other similar expressions. Forward-looking statements are made as of the date of this press release and are based upon management’s current expectations and beliefs concerning future developments and their potential effects on us. Such forward-looking statements are not guarantees of future performance. The following important factors, as well as risk factors described in our reports filed with the SEC, could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements:

·global automobile production volumes;
·the financial condition of our customers and suppliers;
·our ability to make scheduled payments of principal or interest on our indebtedness and comply with the covenants and restrictions contained in the instruments governing our indebtedness;
·our ability to refinance our indebtedness;
·any increase in the expense and funding requirements of our pension and other postretirement benefits;
·our customers’ ability to obtain equity and debt financing for their businesses;
·our dependence on our largest customers;
·pricing pressure from our customers;
·work stoppages or other labor issues affecting us or our customers or suppliers;
·our ability to integrate acquired businesses;
·our ability to take advantage of emerging secular trends;
·risks related to changes in U.S. trade policies;
·risks associated with our non-U.S. operations, including foreign exchange risks and economic uncertainty in some regions;
·risks associated with business divestitures; and
·costs or liabilities relating to environmental and safety regulations.

 

We do not assume any obligation to update or revise the forward-looking statements contained in this press release.

 

Contact:

Derek Fiebig

Executive Director, Investor & External Relations

(248) 675-6457

fiebig.derek@towerinternational.com

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts - unaudited)

 

   Three Months Ended March 31, 
   2019   2018 
         
Revenues  $378,738   $407,233 
Cost of sales   341,971    359,049 
Gross profit   36,767    48,184 
Selling, general, and administrative expenses   25,186    23,345 
Amortization expense   109    112 
Restructuring and asset impairment charges, net   123    1,243 
  Operating income   11,349    23,484 
Interest expense   5,640    4,676 
Interest income   609    325 
Net periodic benefit income   31    558 
Other income   4,540    - 
Income before provision for income taxes and income / (loss) from discontinued operations   10,889    19,691 
Provision for income taxes   3,217    3,236 
Income from continuing operations   7,672    16,455 
Income / (loss) from discontinued operations, net of tax   (12,740)   845 
Net income / (loss)  $(5,068)  $17,300 
           
Weighted average basic shares outstanding   20,632,128    20,556,613 
Weighted average diluted shares outstanding   21,063,287    20,951,973 
           
Basic income / (loss) per share:          
Income per share from continuing operations  $0.37   $0.80 
Income / (loss) per share from discontinued operations   (0.62)   0.04 
Income / (loss) per share   (0.25)   0.84 
           
Diluted income / (loss) per share:          
Income per share from continuing operations  $0.36   $0.79 
Income / (loss) per share from discontinued operations   (0.60)   0.04 
Income / (loss) per share   (0.24)   0.83 

 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands - unaudited)

 

   March 31,   December 31, 
   2019   2018 
         
ASSETS          
Cash and cash equivalents  $197,947   $68,066 
Accounts receivable, net of allowance of $846 and $823   154,094    113,128 
Inventories   64,005    69,434 
Assets held for sale   -    431,613 
Prepaid tooling, notes receivable, and other   32,424    27,552 
Total current assets   448,470    709,793 
           
Property, plant, and equipment, net   537,763    347,803 
Operating lease right-of-use assets   106,414    - 
Goodwill   7,560    7,453 
Deferred tax asset   86,769    82,832 
Other assets, net   22,775    22,511 
Total assets  $1,209,751   $1,170,392 
           
LIABILITIES AND EQUITY          
Short-term debt and current maturities of finance lease liabilities  $26,274   $4,148 
Short-term operating lease liabilities   13,256    - 
Accounts payable   187,603    188,760 
Accrued liabilities   94,733    84,306 
Liabilities held for sale   -    167,882 
Total current liabilities   321,866    445,096 
           
Long-term debt, net of current maturities   242,870    294,457 
Finance lease liabilities, net of current maturities   140,496    - 
Operating lease liabilities, net of current maturities   96,185    - 
Pension liability   44,381    45,762 
Other non-current liabilities   51,459    84,163 
Total non-current liabilities   575,391    424,382 
    Total liabilities   897,257    869,478 
           
Stockholders' equity:          
Common stock   225    224 
Additional paid in capital   349,272    347,816 
Treasury stock   (37,743)   (36,882)
Retained earnings   61,060    64,676 
Accumulated other comprehensive loss   (60,320)   (74,920)
Total stockholders' equity   312,494    300,914 
           
Total liabilities and stockholders' equity  $1,209,751   $1,170,392 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands - unaudited)

 

   Three Months Ended March 31, 
   2019   2018 
         
OPERATING ACTIVITIES:          
Net income / (loss)  $(5,068)  $17,300 
Less: Income / (loss) from discontinued operations, net of tax   (12,740)   845 
Income from continuing operations   7,672    16,455 
           
Adjustments required to reconcile income from continuing operations to net cash used in continuing operating activities:          
Deferred income tax provision   2,272    2,080 
Depreciation and amortization   15,425    14,511 
Non-cash share-based compensation   986    703 
Pension income, net of contributions   (1,381)   (2,237)
Change in working capital and other operating items   (40,574)   (61,934)
Net cash used in continuing operating activities  $(15,600)  $(30,422)
           
INVESTING ACTIVITIES:          
Cash disbursed for purchases of property, plant, and equipment, net  $(39,642)  $(12,075)
Proceeds from disposition of European operations, net   277,406    - 
Net cash provided by / (used in) continuing investing activities  $237,764   $(12,075)
           
FINANCING ACTIVITIES:          
Proceeds from borrowings  $44,500   $1,339 
Repayments of  borrowings   (48,658)   (1,138)
Repayment on Term Loan Credit Facility   (50,000)   - 
Debt financing costs   (2,276)   - 
Payments for termination of hedging instruments   (28,582)   - 
Dividend payment to Tower shareholders   (2,680)   (2,465)
Proceeds from stock options exercised   160    112 
Purchase of treasury stock   (861)   (474)
Net cash used in continuing financing activities  $(88,397)  $(2,626)
           
Discontinued operations:          
Net cash from discontinued operating activities  $7,142   $29,615 
Net cash used in discontinued investing activities   (9,086)   (18,079)
Net cash used in discontinued financing activities   (1,787)   (12,613)
Net cash used in discontinued operations  $(3,731)  $(1,077)
           
Effect of exchange rate changes on continuing cash and cash equivalents  $(155)  $1,856 
           
NET CHANGE IN CASH AND CASH EQUIVALENTS  $129,881   $(44,344)
           
CASH AND CASH EQUIVALENTS:          
Beginning of period  $68,066   $96,313 
           
End of period  $197,947   $51,969 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

(Amounts in thousands - unaudited) 

 

Adjusted EBITDA Reconciliation  Three Months Ended March 31, 
   2019   2018 
Net income / (loss)  $(5,068)  $17,300 
Restructuring and asset impairment charges, net   123    1,243 
Depreciation and amortization   15,425    14,511 
Acquisition costs and other   28    69 
Long-term compensation expense   3,436    1,287 
Lease expense   -    2,450 
Interest expense, net   5,031    4,351 
Net periodic benefit income   (31)   (558)
Other income   (4,540)   - 
Provision for income taxes   3,217    3,236 
(Income) / loss from discontinued operations, net of tax   12,740    (845)
Adjusted EBITDA  $30,361   $43,044 

 

 

Free Cash Flow Reconciliation  Three Months Ended March 31, 
   2019   2018 
Net cash from continuing operating activities  $(15,600)  $(30,422)
Cash disbursed for purchases of PP&E   (39,642)   (12,075)
Free cash flow  $(55,242)  $(42,497)

 

Net Debt Reconciliation  March 31,   December 31, 
   2019   2018 
Short-term debt and current maturities of finance lease liabilities  $26,274   $4,148 
Long-term debt, net of current maturities   249,776    300,417 
Finance lease liabilities, net of current maturities   140,496    - 
Debt issue costs   (6,906)   (5,960)
Total debt   409,640    298,605 
Less: Cash and cash equivalents   (197,947)   (68,066)
Net debt  $211,693   $230,539 

 

 

 

 

 

TOWER INTERNATIONAL, INC. AND SUBSIDIARIES

CERTAIN ITEMS INCLUDED IN NET INCOME

(Amounts in thousands, except per share amounts - unaudited)

 

   After tax   Before tax 
   Three Months Ended   Three Months Ended 
   March 31,   March 31, 
   2019   2018   2019   2018 
                 
Income / (expense) items included in net income / (loss), net of tax:                    
Restructuring and asset impairment charges, net                    
One-time restructuring actions  $-   $(623)  $-   $(794)
Other income                    
K-K   3,458    -    5,240    - 
Swap termination fee   (532)   -    (700)   - 
Discontinued operations                    
Income / (loss) from discontinued operations   (5,845)   845    (5,845)   845 
Loss from sale of discontinued operation   (6,895)   -    (6,895)   - 
Total items included in net income / (loss), net of tax  $(9,814)  $222           
                     
Net income / (loss)  $(5,068)  $17,300           
                     
Memo:  Average shares outstanding (in thousands)                    
Basic   20,632    20,557           
Diluted   21,063    20,952           
                     
Income / (loss) per common share (GAAP)                    
Basic  $(0.25)  $0.84           
Diluted   (0.24)   0.83           
                     
Diluted adjusted earnings per share (non-GAAP)  $0.23   $0.82           

 

 

 

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